Today,
the entertainment industry, specifically the movie industry, remains to
be one of the most popular industries of our society. With itís high popularity,
and attempt to satisfy consumer needs, the industry contains a great deal
of competition between corporations. As a result of the high level of competition,
the ability to use technological advancement becomes a major factor in
reaching success. With the increase of technology, companies are continuously
looking to change rather than stabilize, to overcome their competitors.

In
the motion picture industry, there are two major areas where technology
is changing the industry.

The Internet has the
greatest affect on the movie industry, It is affecting the industry in
many different ways. Standard and Poorís industry analysis points out the
fact that time spent in front of a computer screen if overtaking time spent
in front of a television screen in most American households. Entertainment
companies are taking advantage of the resources and opportunities the World
Wide Web has to offer in advertisement, production, and sales. Large Distribution
companies, such as Disney, are going
about it differently than some of the many smaller production companies.
Through technological innovation, Hollywood has reached the cyberworld
and is not looking back.

The
large players in the distribution category (ex. Time Warner, Sony
Corporation, Universal Studios,
Paramount/Viacom,
Fox
Entertainment, Disney, and Miramax)
have the financial stability, and are creating their own Internet access
through their own large networks. For instance, Standard and Poorís reports
that Disney bought 42% of the Internet networking company Infoseek, and
launched its own GO.com network.

In order to stay
competitive, other large firms followed. Sony Corp, and Time Warner, each
took a share of the newly acquired Cdnow.com
Retail Company, which was formed by Columbia House Co. Each were reported
as to owning 37% (Standard and Poorís).

Production
and broadcast companies have found the Internet can provide them with many
resources to better their success. It is becoming very common for smaller
production agencies to merge with large networking and communication systems.
Each player in the deal can benefit from the others services. The data
networking of the communication companies offers high file transfer speeds
that significantly reduce the time and costs of film production, video
editing and collaboration time (Business Wire, Oct 11, í99).

On Nov. 19th,
1999, KnightLight Pictures, a full service multimedia and film production
company, merged with IVID Communications. IVID
provides planning and marketing of products delivered on the Internet and
CDROM. Now, with the ability to take itís services on-line, KnightLight
Pictures is a full service video and film production company that offers
interactive CDROM creation, Web site development, graphic animation, and
infomercials, using their own film production tools. "Because there are
so many ways for a company to create, package and distribute its message,
it can be overwhelming, and as you have a handle on technology, it changes."
says KnightLight founder and owner David St. Pe.

Similar mergers have
taken place. For instance, Lucent Technologies and Quad International Communications
Corporation, a broadband carrier focused on the media and entertainment
industries, have recently joined in order to create a similar service to
that of KnightLight.

Many
new techniques are happening within the industry because of Internet access
was attained. Movies can now be seen by the viewerís demand over the Internet.
American
Film Technologies, Inc., with the assistance of Microcast,
has old classics to new releases available on the web. Microcast, the worlds
highest capacity turnkey provider of Internet video services, has developed
the largest video streaming network, with a current capacity to deliver
up to 1,000,000 simultaneous viewers at broadband speed (ENTERTAINMENTWIRE,
3-29-00). AFT has been criticized for bringing color to old classic black
and white films, but will likely bring upon more criticism when these films
are interrupted by Microcast demanded commercials.

With the collaboration
of different types of service providers, it is evident that the movie industry
is becoming vertically integrated. Production companies such as KnightLight
Pictures understands that their business can benefit from other technological
providers. Instead of trying to design their own networking and internet
service, St. Pe knows that technology will change very quickly, and during
the time spent on trying to get a grip on it, it will soon change to something
else.

A
new approach to viewing three dimensional movies came about when Dynamic
Digital Depth, Inc. (DDD) joined with Wave Pictures to bring giant 3D movies
to personal computers via the web. Waveís giant screen 3D movies will be
reformatted and able to download using DDDís brand new DeepSee&trade;
plug-in for Apple QuickTime (Business Wire, 3-28-00).

Unfortunately,
advancement in technology has had an ill effect on the movie industry as
well. With films available on the Internet, the ability to illegally pirate
these films has become a concern for the industry. A new video program
called ĎDivXí, similar to a MP3 file for audio, enables the computer underground
to pass uncopyrighted movies among networks. These movies can be downloaded
and saved on CDís. The Motion Picture Association of America, has already
started lawsuits against pirating, or offering unauthorized movies over
the internet in a plea to save the industry (AP wire, 3-27-00).

Film
Production Enhancement

Although it is not as
big of a factor as the Internet, and is significantly older in origination,
the ever-improving world of production is affecting the movie industry
with great magnitude. By technological innovation in special effects and
distribution of copies, filmmakers must be aware of the changes that drive
the industry in a direction of modernization. More specifically, the main
areas are:

As technology increases
at an exponential rate, all levels of the supply chain in the movie industry
are driven to continually strive for change. No Corporation or firm is
large enough, or so financially stable not to worry about being outdone
by its competitors. In order to be successful in the vertically integrated
industry of film making, specialization in a particular area is very important.

"A computer is like a pencil.
It is a really amazing pencil. [But] computers, donít create computer animation
any more than a pencil would create a drawing."-- John Lasseter (Director, V.P.,
Creative Development at PIXAR)

Using computers to make human like imagery,
or special effects, is a tactic thatís been used in film making for many
decades. This is no new technology in the movie industry, however, special
effects gurus such as George Lucas (Star Wars, Episode One: The Phantom
Menace, Deep Impact) and James Cameron (Titanic, Terminator II, True Lies)
have taken the computerís role in movies to a higher level. These two have
dazzled consumers with imagery of ships, spaceship battles, liquid metal
people, and world destroying tidal waves, all through computer generation.

With the movie industry becoming more vertically
integrated, many movie production companies are looking to smaller special
effect companies who specialize in the area, to perform their duties.

Recent box offices hits such as The
Toy Story, and The
Matrix, have used special effects that have never been seen in movies.
With the increasing ability to use computers in films, movie making analysts
look towards the day where movies will be able to be made without actors,
or even filming scenes.

Sweeping the home entertainment
front, is the creation of digital video disks, called DVDís.These DVDís add a brighter and sharper
picture than video cassettes, and can move from one part of the movie to
another much quicker and easier. In 1999, is was reported that three million
households in the U.S. had a DVD player instead of a VCR, and that number
is projected to triple in 2000 (Standard and Poorís).